Accounting Concepts

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  • Created by: Natalie
  • Created on: 08-12-20 16:20

1. Accruals

  • Only transactions that can be expressed in terms of money are recorded.
  • Each financial transaction is recorded by two equal in value and opposite accounting entries.
  • Expenses/incomes for goods and services are matched to the same period.
  • Assets and liabilities are recorded in the financial statements at historical cost.
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2. Goods on sale or return

  • Duality
  • Going concern
  • Materiality
  • Accruals

3. Irrecoverable debts written off

  • Materiality
  • Consistency
  • Realisation
  • Accruals

4. Financial statements prepared on same principles

  • Accruals
  • Money measurement
  • Consistency
  • Prudence

5. Going concern

  • Assets and liabilities are recorded in the financial statements at historical cost.
  • Presumes that the business will continue to trade in the forseeable future.
  • Personal assets/liabilities are kept separate from those of the business.
  • Revenue for goods can only be recorded when the legal title passes between buyer and seller.
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